It wasn’t just everyday Australians impacted by COVID-19; superannuation funds have also faced new challenges. Here are three key areas I believe will see further concentrated activity throughout 2021.
MySuper Heatmap Pressure
The pressure from the heatmap for MySuper superannuation products will continue to rise – this is an area the government will not back away from. The 30 June 2020 MySuper Product Heatmap summarised three key insights – total fees and costs disclosed overall for MySuper products have decreased; admin fee structures haven’t changed on the whole; and those MySuper products charging relatively high fees and costs still continue to do so.
Business Performance Review
Declining returns, reduction in asset values and the number of member accounts are just one of the legacies of 2020 for Australia’s super funds. February 2021 will see the first annual outcomes assessment for MySuper products and there will be more debate around investment styles and returns.
Transformation covers a broad area including technology and how it can support super funds, as well as mergers and acquisitions. Pressure on costs continue to mount for industry players and technology is an interesting solution for supporting compliance, meeting Business Performance Review objectives and transforming the delivery of member services. Also falling into the transformation space will be the impact of Vanguard and its low-cost investment approach. We may see more common service providers aligning their interests and creating greater scale to reduce costs for members. Brands would still survive in this concept of a ‘mega-platform’. I think this is a model that will gain strength as more pressure mounts to deliver cost benefits.
Sean is Managing Director of McGing Advisory & Actuarial and is currently Deputy Chair of the ASFA Victorian Executive. These views are his own personal views.
Sean and the team at McGing Advisory & Actuarial provide a wide range of Superannuation support services including administration, investment, insurance, risk, governance and actuarial advice.